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Claiming $7,500 credit on 2012 return with a 2013 delivery

Claiming $7,500 credit on 2012 return with a 2013 delivery

Submitted by kidalex on Mon, 2012-12-17 14:44

I've heard that Tesla is accommodating those who will be receiving the car in Jan/Feb by doing the paperwork and therefore officially selling the car before Jan 1, so those can still claim the federal credit a year earlier. Any truth to that?

DouglasR |
17 December 2012

It's hard to see how you can place the car in service if it hasn't been delivered yet, but I'd also be interested to know whether anyone has tried this.

jdimare |
17 December 2012

I'm doi exactly that with Tesla and taking a smal lleap of fiath that I get the car in ealry Jan...I'm pretty comfortable with it, john

kidalex |
17 December 2012

So, how is it done, jdimare? Who does one talk to?

jat |
17 December 2012

IANA(tax)L, but I I believe the delivery date controls when you are eligible to take the credit (though the purchase date controls what credit you can take):

The credit is taken on form 8936 attached to your 1040. You can get a copy of the IRS web site, the instruction are in the same pdf.

Line 2 is VIN.

Lin 3 is date in service.

Since you can not legal drive the vehicle until you have applied for license plates from your state. I would quess the earliest date in service you can use is the date the it is licensed.

If your car is done and Tesla applies for your license in 2012 you can probably get the credit this year, but I would quess that only applies to about one week (10 days maybe) of production.

DouglasR |
17 December 2012

Applying for the license in 2012 is a necessary condition for getting the credit in 2012, but is it sufficient? I would think that having possession of the vehicle would also be necessary. However, if TM is facilitating (and advising you on?) the credit, then they may have some additional information on how this transaction will be interpreted. My guess, however, is that you are taking a risk, probably won't get caught, but will bear responsibility for the consequences if you do.

bobinfla |
17 December 2012

The explanation I was given was that if all these things happen by December 31st, then it would count as a 2012 Delivery:
a. They build my car
b. I pay for the car
c. They put it onto the truck for delivery

I believe before it goes onto the truck, all the required registration paperwork and whatnot need to be completed and back to Tesla so they can file them, so that's probably a subset of c.

So at this point (haven't gotten a VIN yet), I'm hoping to see it on the truck by end of December, delivered about a week into January, and include the credit on this year's taxes.

noel.smyth |
17 December 2012

thats how it was explained to me, i pay for the MS in 2012, its built and on the way and i get it in first two weeks of 2013 and i need to schedule the DS sometime after physical delivery. I was expecting feb/march so this is great for me and i suspect this approach also helps with the 2012 #s for TSLA which is also fine for me, although I am more of a long term investor in TSLA.

jat |
17 December 2012

Note there is also a possibility that the tax credit might be $10k next year (though of course it might go to zero).

The potential of a $10,000 tax credit for next year is only for cars that cost less than $45,000). The federal budget proposal says "In general, the credit would be the product of $5,000 and 100 and the amount by which the vehicle’s footprint gallons per mile exceeds its gallons per mile, but would be capped at $10,000 ($7,500 for vehicles with an MSRP above $45,000). " So the tax credit would be capped at $7,500 for cars costing $45,000 or more, like the Tesla Model S.

The one issue you might want to check on is risk of loss in shipping. For example, in my case, title passed to me when I paid for my car and took delivery in Seattle. Under those circumstances, the law is clear that the seller bears the risk of shipping loss. However, you will be paying for the car and presumably taking title before the car is shipped. Under certain conditions, the risk of loss could pass from the seller to the buyer when the car is placed in the possession of a common carrier, i.e. the trucking company. I think it unlikely, but you might want to make sure that the MVPA specifies that TM is responsible for shipping and for any damage incurred while the car is in transit.

OCMS |
28 December 2012

As noted above, you can only claim the 2012 tax credit if the car is built, paid for, and leaves the factory by the end of 2012. This is per Tesla and my accountant.